Why do experienced/accomplished traders work for a firm when they can work on their own and make more profit?
[I am a sophomore in the process of learning more about financial services industry. Please be cooperative if this comes off as naive. Thank you all for your responses.]
Infrastructure, access to greater amounts of capital, being able to get news/information more quickly, etc.
So if they are already accomplished, they can have their own shit, right?
Read Liar's Poker
Same reason Marissa Mayer fired all the people who telecommute. The office is where you have to be.
Infrastructure (capital, systems) and information: Being able to trade/be part of the interbank market (as opposed to going through a retail broker) and seeing the flows that goes through (especially if you want to trade something more complicated than spot FX or equities) is invaluable. Can't stress enough. Earn Bid-Offer spread: If you are on a flow desk in theory you make $ by locking in the spread. Not many products have this luxury anymore though, but at least you can leverage your flow to reduce your own prop trading costs (crossing someone else's spread). Not using your own money: Uncertainty will end you, at least you are only risking your job though when working for someone else.
Unfortunately we rely on our superiors to reward us for when we get things right - doesn't appear to be the case anymore and bonuses are becoming more dependent on firm-division-subdivision-team-individual performance (all the separate parts need to meet some benchmark in order for a bonus to filter down to you). However, management appear only too happy to be rid of you/openly criticize when things aren't going well.
Trading on the sell side is a completely different universe from trading your own cash on your own. Its not only a completely different style of trading, it also takes a whole different psychology to do it.
But even taking that away, if you are anything but a cash trader, it would be a bit difficult/impossible to just go trade PA the products you know how trade.
Because doing things on your own often involves having to do a lot more than just trading (especially if you're managing OPM). If you're a trader, you might not like dealing with the "other" stuff, so it makes sense for you to stay in a place where the infrastructure is already available. This is the idea behind many funds, e.g. Millennium.
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